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Social Power And The Coming Corporate Revolution

Civilizations have clashed in an unexpected way this year, as ordinary people using Facebook and Twitter knocked down dictators in Tunisia, Egypt and Libya—and are threatening absolute rule in Syria. A so-called Arab spring brought waves of liberation to a long-oppressed region. Something similar is happening in more democratic countries. In Spain throngs of young people, known as “the indignant ones,” occupied public plazas nationwide, protesting unemployment and exclusionary politics. In Israel ordinary citizens from both right and left united in massive demonstrations against high housing prices. And in India one man’s campaign against corruption went viral, bringing thousands to the streets in support.

This social might is now moving toward your company. We have entered the age of empowered individuals, who use potent new technologies and harness social media to organize themselves. A few have joined cause with WikiLeaks and its terrifying stepchildren, upending the once secure corridors of the U.S. State Department and Pentagon. But most are ordinary people with new tools to force you to listen to what they care about and to demand respect. Both your customers and your employees have started marching in this burgeoning social media multitude, and you’d better get out of their way—or learn to embrace them.

The institutions of modern developed societies, whether governments or companies, are not prepared for this new social power. People are changing faster than companies. “I don’t think it’s crazy to ask if your CEO is the next Mubarak,” says Gary Hamel, one of business’ most eminent theoreticians of management. “The elites—or managers in companies—no longer control the conversation. This is how insurrections start.” Says Marc Benioff, CEO of Salesforce.com, Inc. : “This isn’t just about Arab spring. This is about corporate spring.”

In this new world of business, companies and leaders will have to show authenticity, fairness, transparency and good faith. If they don’t, customers and employees may come to distrust them, to potentially disastrous effect. Customers who don’t like a product can quickly broadcast their disapproval. Prospective employees don’t have to take your word for what life is like at your company—they can find out from people who already work there. And long time loyal employees now have more options to launch their own, more fleet-footed start ups, which could become your fiercest competitors in the future. “Companies that have been around more than five years are having a hard time because this is so different from what they know” is the jarring observation of Doreen Lorenzo, president of design and consulting firm Frog.

But overall these changes suggest a bright future for business and society globally. The world is becoming more democratic and reflective of the will of ordinary people. And pragmatically, social power can help keep your company vital. Newly armed customer and employee activists can become the source of creativity, innovation and new ideas to take your company forward. A growing number of executives and companies are converts to this point of view.

It calls for humility of a sort most business leaders aren’t used to. “Trust is built by sharing vulnerability,” says John Hagel, a long time author and consultant who co-chairs Deloitte’s Center for the Edge. “The more you expose and share your problems, the more successful you become. It’s not about the top executive dictating what needs to be done and when, it’s about providing individuals with the power to connect.”

Benioff recounts his own epiphany about humility and transparency at Salesforce, which sells online software for salespeople. “In 2005 we had reliability problems with one of our servers. We weren’t talking about it, and customers were upset. It turned into a p.r. problem. And my marketing leader Bruce Francis came in and said, ‘Marc,you need to expose everything. You need to have a website that is directly connected to the computers. If they are running, the website should be green, and when they’re not it should be red.’ I had to open up.” Such a system has been in place ever since. “Social success is really based on trust,” Benioff opines. “If you don’t have transparency you will be eliminated by the system around you.” He is now writing a book arguing that every company must become what he calls a “social enterprise.”

The headlines abound with examples of the precariously shifting dynamic. Companies that show greed or insensitivity to workers or customers quickly find themselves on the defensive. Hershey looked Scrooge-like and clueless in August when 400 college students hired through a State Department-sponsored foreign-exchange program revolted, walking off their jobs. They didn’t like their stressful work in a candy-packing factory, sometimes on all-night shifts. These kids from China, Nigeria, Turkey and Ukraine are facile digital communicators and used YouTube, Facebook and other tools to bring attention to their plight.

Adidas recently found itself under attack in New Zealand when fans of the hugely popular national rugby team were outraged to learn that Adidas team jerseys were being sold for significantly more there than elsewhere in the world. Fans went online to research comparative product prices in New Zealand and the U.S. and then to organize fellow fans in protest. Soon national news programs were focusing on the protest and Adidas’ flat-footed response. People started returning Adidas clothing to stores in disgust, and employees felt so threatened they removed logos from company vehicles, reported the New York Times.

Executives can’t hide from the outrage. In the Netherlands earlier this year a social media campaign against bankers’ bonuses focused on Amsterdam-based ING. People began threatening en masse to withdraw deposits. CEO Jan Hommen voluntarily waived his upcoming $1.8 million bonus and ordered all company directors to do the same. British Prime Minister David Cameron recently proposed shutting down social media during riots like those that brought chaos to the U.K. recently. But Google Chairman Eric Schmidt replied to that idea in an interview in the Guardian with advice that applies equally to CEOs: “It is a mistake to look into the mirror and try to break the mirror. Whatever the problem was [that caused the riots] the Internet is a reflection of that problem. If you have a problem, use the Internet to understand what the problem is.”

If there’s a primary culprit for this changed landscape, it’s Facebook. The social network’s astonishing success in less than eight years has brought it more than 750 million active users in every country on earth, made it the world’s busiest website—and the most popular tool for fomenting insurrection around the world. Why? Because Facebook gives all its users a personal broadcast platform. In the past only a select few had such power—Walter Cronkite, for example, or those at the BBC. People on Facebook, by contrast, usually just broadcast to friends, which seems only modestly impactful, at first. However, a peculiar new dynamic—call it a viral consensus—may develop. Say you post a status update, photo or video that expresses a view that your friends agree with or respond to; that message can spread like influenza. Friends click “like,” or comment on the update, saying, for example, “Yeah, I think Mubarak has got to go, too!” or “I’m throwing out all my Adidas stuff!” That rebroadcasts it to their friends. The “meme,” or idea, can go viral and spread almost instantly to vast numbers, if it happens to strike a chord with the zeitgeist.

LinkedIn is another central tool for empowerment all executives ought to ponder—and not only because they already maintain a profile there (along with more than 115 million others). At its heart LinkedIn is a way to maintain a permanent public work résumé. Many of your company’s most valued employees now have CVs out on the street full time—searchable by millions, including your competitor’s recruiters. Do you want to take a chance mistreating or ignoring such people?

Plenty of other social software tools are now in the hands of ordinary people as well. They live on mobile phones that are really powerful computers—broadcast terminals able to spew opinion or information at will, as well as receive it. YouTube, for example, provides endless hours of light entertainment—or can be used by anyone anytime to broadcast video. In 2009 one appeared showing a Domino’s Pizza worker putting cheese in his nose while making a sandwich, among other abominations. Its stock dropped 10% in short order. One employee’s bad judgment damaged an entire company’s reputation. Twitter is a potent broadcast tool for anyone with a following; FourSquare, a way to coordinate in the physical world; GroupMe, just sold to Skype, enables you to send a single text or make one telephone call to a group of up to 25. All these services are basically free.

New incarnations of social power emerge almost daily from legions of entrepreneurs worldwide who see how rapidly success can come in a densely networked world. That ease of company creation is yet another example of individual empowerment. GroupMe’s two founders—ages 24 and 29—sold their company in August for around $50 million just one year after it debuted.

Bo Fishback created his tool of social power with stunning speed. He’s CEO of Zaarly, a location-based market place for buyers and sellers of both products and services; buyers post what they want, and people looking to earn money make offers to provide it. The company was born in February, when Fishback—a perpetual entrepreneur—attended “Startup Weekend” in Los Angeles. He pitched his idea Friday, had a working prototype by Sunday and says that Tuesday he closed $1 million in financing. (He already knew veteran investors, granted.) Two weeks later Zaarly launched in beta at South By Southwest Interactive in Austin, Tex. and did $10,000 worth of transactions. The service debuted in late May in several cities and by late August $3.4 million in transactions had been requested and 50,000 people had registered.

Fishback’s whole life as a Net-centric businessman presumes social power. “Empowered individuals are what drives Zaarly on both sides of our marketplace,” he says. “On the buyer side it transcends typical marketplace dynamics where you can only buy what someone else is already selling. On the fulfiller[or seller] side this demand-driven market gives people a new way to work for themselves.”

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American CEOs on average took home 263 times the salary of their average worker. To add insult to injury, CEOs that punted more of their workers took home 42 percent more than their counterparts who laid off fewer workers. It’s not just jobs that America needs, it’s a share of the corporate wealth that doesn’t just belong to those who spend their days in the corner offices.

Here is an article showing the massive chasm that is growing between the haves and have-nots of the corporate world

I had a long term vision and since joined social networking in advance to help create a positive impact Globally on improving performance, sharing and acquiring knowledge and helping people to improve their own efficiency and lifestyle all by eliminating the purchases of fake items produced in the World and then making a point to report the wrong things in the World be it in Corporates or Countries. The whole thing will now work Globally in clusters and come up with the right future for people to live..

the truth will now be revealed be it corporate or products. My wish is to eliminate fake products that is creating environment harm and waste of money for the ordinary people..and same time expose the corrupt in politics or other fields to come up with complete fair game play in this World as today the World is one Single World to exchange people, products and ideas..

Software is only a part solution. Certainly, the right software can lend structure to creating your social enterprise. The other part is your deployment approach. The following white paper explains how to deploy OnTheSystem Social Software to create a best-practice driven organization.

Good article but I think this speaks more to how technology (social media) can empower individuals to create and innovate with or without the enterprise and not so much about the divide between classes.

Social Media isn’t bringing down Arab regimes, what a ridiculous statement, people being able to access wide ranging media and the internet and having greater knowledge to hand is the catalyst. Having been oppressed for years, the people are finding that the world doesn’t revolve around a powerful few. Having discussed this furtively and with passion in small dark rooms, they built a network using completely off the radar communications to establish their plans and organisations. When they were ready they began to emerge and then, those on the fringes and those on the bandwagon started to Twitter and Post Comment about it. Do you honestly think that in countries where people are killed for speaking out against the ruling powers that they organised a revolution using a trackable traceable media??? Get a grip.

These tools in communication and collaboration certainly enable mass protest and mass action. They may also be lowering the bar of grievances for the disaffected. Unifying to overthrow a tyrannical regime is one thing. since the grievances must be extreme and universal to create a unified opposition. The flash mobs of London and Vancouver enabled these disaffected to find not only each other but to search for rationales and targets. They are no longer agents of social change but seemingly arbitrary forces of nature.

(1) Within this social power corporate revolution, how do you think this will balance the workforce and create a shift in the work culture that embraces both women’s and men’s strengths? If we work at shifting the culture so that it is more balanced for both genders, then I think the ability to collaborate and for people to realize their full capabilities would be invaluable.

Instead of adding more to the work load I see how social media and virtual offices could allow for more creative work schedules that allows parents to do more of the raising of their kids, working virtually, etc. It could also lead to people having more than one career field as well.

(2) How do we stay focused on virtual societies being built with values and ethics? Do you see more of a need for emotional and gender intelligence training? Increasing use of the internet can cause people to become more self-absorbed, lose touch with being tactful, being honest, being a good citizen, and having good interpersonal communication skills. How will this affect the quality of relationships–at work, at home, with friends/family? How do you decide and choose prudence, humbleness…? And, what is really behind anonymity? Does this let social etiquette fall to the wayside?

In other words…we have the intelligence to create the technology, and connect people across the globe more than ever before–if we want this to be an agent of change that betters humanity, then what are you doing personally? We’re responsible for where we place our focus and how we choose to act. So what are we choosing to do daily to ensure that you are part of this force that stabilizes, normalizes, and makes this technology an extension of your real self and giving back?

As workers become more important than stockholders, profits will no longer be produced by layoffs. As more transparency evolves, the dirty little secrets of capitalism will be exposed, and that could spell trouble for banksters and corpsters.

The use and more to the point, trademarking of the term ‘social emterprise’ by Salesforce, offers a clue to where the influence derives from.

For example:

“The emerging Information Age will provide an unprecedented opportunity for outreach and communication at local community levels by way of the Internet. Given the opportunity to communicate and research global resources, communities will become able to assess their own needs, identify resources to meet those needs, and procure those resources. In that sense, the information economy can work to the advantage of impoverished people in a way never before possible.

In order to participate in the information economy, it is essential for local communities in any nation in the world to be able to access common information. Given that the Internet and world wide web are in their development infancy, physical infrastructures for the Internet on a global basis need to be built: the global information infrastructure, or GII . So why not create new companies that not only fulfill this very lucrative and ongoing infrastructure deployment, and direct the profit to additional social needs such as poverty and hunger relief? This would include companies working in:hardware side: enterprises which create the physical infrastructure, via manufacture or installation of components software side: enterprises providing web design and development including programming and tools associated with web design/development; and, online communications tools, electronic commerce programs and methods The opportunity for poverty relief was identified not only as a moral imperative, but also as an increasingly pressing strategic imperative. People left to suffer and languish in poverty get one message very clearly: they are not important and do not matter. They are in effect told that they are disposable, expendable. Being left to suffer and die is, for the victim, little different than being done away with by more direct m eans. Poverty, especially where its harsher forms exist, puts people in self-defence mode, at which point the boundaries of civilization are crossed and we are back to the law of the jungle: kill or be killed. Whilst the vast majority of people in poverty suffer quietly and with little protest, it is not safe to assume that everyone will react the same way. When in defence of family and friends, it is completely predictable that it should be only a matter of time until uprisings become sufficient to imperil an entire nation or region of the world. People with nothing have nothing to lose. Poverty was therefore deemed not only a moral catastrophe but also a time bomb waiting to explode. “

This is a very strange take on a very positive development – which repeats a number of common misconceptions about the way social media affects corporations. Firstly, there’s no coverage of the #1 win for corporations – getting into consumers’ DNA. Secondly the biggest wins outside of marketing are typically internal use of social business tools. Thirdly, it is totally in accurate to say social media will level corporate hierarchies. Social business software reduces cycles, gets more people on the same page, disperses knowledge, and can be a key accelerator inside many companies. If they know how to use it. Leveraging its power is the issue to focus on – not fear mongering about empowered consumers and flattening management. Everyone’s in a race for time and social media, properly utilized, is a massive competitive edge.

I work with some of these companies in the social media sphere, and while I think there are plenty of interesting things being *written* about this emerging relationship, and while some companies are *doing* interesting things with social media, so many companies are stuck in the dark ages. Behind the scenes, the way they’re executing social media strategies is totally antiquated, backwards, and out of date. Luckily, this will be their undoing.

+1 for this post. The problem is not limited to the CEO class alone. It is pervasive across the entire “manager” section of corporate America. I talked about this in a 5 minute Ignite talk at SXSWi in March this year. The future is always defined by youth and technology, communications and ‘social’ is enabling that definition ever so quickly and radically now – it is a question of empowerment and freedom. ‘experienced’ managers can either be part of that or will be cast away/over thrown before they can come to senses:

+1 for this post on Forbes. The problem is not limited to the CEO class alone. It is pervasive across the entire “manager” section of corporate America. I talked about this in a 5 minute Ignite talk at SXSWi in March this year. The future is always defined by youth and technology. ’social’ communications is enabling that definition ever so quickly and radically now – it is a question of empowerment and freedom.

‘experienced’ managers can either be part of that or will be cast away/over thrown before they can come to their senses, if they have any. I talked about this in my 5 min Ignite talk at SXSWi earlier this year:

These are absolutely exciting times to see the radical transformation and empowerment of a class of people that have been oppressed for a long time. Cheers to freedom!

The language around a lot of this stuff – waves of change, walls coming down, brave new world – has a lot more assumptions about the long-term meaning than evidence of how it plays out. Running Egypt is different from getting rid of a dictator. Hating or loving a product is different from designing it and putting it out in the world. As for the corporate stuff, last night I taught a class with a friend of mine who is the CEO of a video game company. One of the biggest effects of social media, he said, is that now younger employees expect feedback every time they do anything. They have some expectation that mere competence is not enough; you have some right to an audience.

Destruction requires a lot less coordination than construction. Maybe we should differentiate between “harnessing” the power of the mob versus enabling the collaboration of individuals. As for the creation of a new social order? Uncharted territory.

Quentin, that’s an interesting idea correlating social media with the need for immediate feedback, but I think it’s more than that. I think the need for feedback or praise is more a result of millennials having been raised to think they’re special. These younger employees are used to receiving prizes, trophies, and other symbols of praise for even the most minor successes. They were raised to think they were “special” because all the parents were so focused on children’s self esteem. Now these children have grown into adults who work in offices, and they feel like failures when they’re not hearing feedback or praise at work every week. It’s makes for an interesting professional dynamic and certainly personally as well: http://www.theatlantic.com/magazine/archive/2011/07/how-to-land-your-kid-in-therapy/8555/

This comment from the “Wizard of OZ” “Individuals are elated with these new capabilities, yet corporations are as risk-averse as they always were. Many companies are hesitant to create a culture that permits self-empowerment because they are afraid of what might happen if people did things by themselves.”

This is the aversion from managers born, raised and trained in the era of command and control management best practices to letting ideas emerge from the bottom up.

The comment that consumer technology (referring to IT) will always outpace business technology because there is more investment in consumers b/c of the inherent volume advantage.

I learned #2 at Intel as the pentium singularly snuffed out temporarily superior RISC architectures. It was only a matter of time, since Intel was investing $Bn to the other companies $10′s of Mn. Intel of course is now being hoisted by their own petard as the consumer moves from PCs to phones and tablets.

One last observation for this mail = Change is HARD. “Social” is the latest metaphor to describe the evolution of management best practice from command and control to organically self regulated……it probably won’t be the last.

This article talks about how social media are driving change in the corporate world. It points to a major shift from the focus on maximizing shareholder value to maximizing stakeholder value. Excellent work research has been done and a great book “Higher Ambition: How Great Leaders Create Economic and Social Value.” This describes how 36 CEOs have successfully done this in companies in the U.S., Europe and India.

Really interesting piece! The smart companies are using social social media as a listening tool. The flip side of course is the companies that think that they control their employees social media use and of course they can’t.

Now that we are well into this cycle of consumer empowerment (social business), I would have to agree with Pam Strayer’s comments; Your article is definitely a strange take on what are positive developments – especially in emerging markets. Social business gives everyone the potential to participate in the global economy (in a positive way), both as consumers and as entrepreneurs. Case and point, just look at what some E-commerce companies are doing with marketplace (peer to peer trading). it is unfair to say that social media will level corporate hierarchies, it hasn’t. What has happened is that the the hyperlink is holding hierarchy more accountable. That is what we want, a *level* playing field, not a *leveled* playing field. Social business software (or big data, whatever you want to call it) does reduces cycles, gets more people on the same page, and democratizes knowledge, and is a key accelerator in bringing new people online and onto to the global economic platform. Pam also rightly points out that everyone is now in a race for time and that social media, properly utilized, is a massive competitive edge. We now live in a real time world, ‘Time and space’ at least within the context of business, are dying concepts, we are now moving toward the absolute. They say all great changes are preceded by chaos, this what we are living through right now, so lets not be to quick to predict total gloom and doom for corporate structure, rather lets simply understand that we are moving away from an industrial revolution based though processes, to a (democratized) information based one. That creates tension in the short term, but empowers everyone in the long run….it’s a revolution that gen x and gen y (everyone under 45) understand better than the baby boomers. Maybe you start asking us more questions…and stop giving us more of your answers. The cluetrain manifesto: The End Of Business As Usual, captures all this best … Quote: A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, people are getting smarter—and getting smarter and faster than most companies. [Escpecially in emerging markets]… winnners understand that the time for talk is over and that the time for action is now. best regards